A Classical Liberal Blog on Political Science, Economics, Philosophy, Law, and More

Footballers and the Top 1%

I looked today at some data on the changes in top division/Premier League footballers (soccer players for Americans) pay between 1985 and 2010 here in the UK. According to figures compiled by the Professional Footballers Association average pay increased from £1000 per week in 1985 to £33,000 per week in 2010 – an increase of 3,300% over this period (see sportingintelligence.com). Needless to say, this means that ‘the gap’ between the wage of the average worker and that of these particular sports-stars has exploded over the last 25 years – much in the same way that ‘the gap’ between CEO pay and that of the average worker has mushroomed. Indeed, increases in CEO pay though far outstripping that of average workers have been lower than those enjoyed by top flight footballers.

These figures clearly put footballers in the ‘top 1%’ – but does anybody seriously believe that football players have achieved these gains at the direct expense of the average worker or that there is some sort of sinister elite conspiring to raise footballers pay? I think not. The reality is that a very large number of people who have seen only moderate increases in their wages/salaries over recent years have been willing to spend a higher proportion of their income watching football. Many average workers have willingly handed over a part of their salary to watch games – and many more have done so indirectly by boosting advertising revenue as TV coverage has expanded rapidly in recent years. The supply of top flight players has not increased significantly over time, but the demand for their ‘services’ has rocketed – and so as a consequence has their pay.

There is, of course, no difference in principle between this explanation of footballers pay and what has happened to CEO compensation. On the one hand, globalisation has expanded the demand for those who have the skills needed to manage increasingly global businesses but the talent pool of those available to fill these roles has not expanded at the same rate – result, rocketing compensation for corporate executives. I fully accept that in some companies there may be serious principal v agent/corporate governance problems which enable executives to pay themselves at the direct expense of share-holders -though not at the expense of ‘average workers’. I also believe that bankers who are in receipt of tax-payer bailouts are indeed the beneficiaries of an injustice – the corporatist/Keynesian injustice of not allowing those who have failed to go bust. In the majority of cases though, the likelihood is that rising CEO pay is no more the result of some corporate/elite conspiracy than is the pay of footballers. The pay increases are neither ‘just’ nor ‘unjust’– they are the result of what people are voluntarily willing to pay for services that they value more than the money needed to buy them.

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4 Responses

Very interesting read. Although, some people I’ve talked to probably would argue that extremely high compensation of sports stars does come at the expense of the public. “Isn’t it awful that football players get paid more than scientists?” That kind of stuff.

I did read an interesting article which basically said that most companies want to boast about paying their top managers “above average” (to attract better talent) and since top manager pay at public companies is required to be disclosed, they can actually find out what average is. The result, of course, is an ever increasing “average” level of pay.

I think the same principle might be at play in football (and sports in general).

With regard to football there may be one distorting factor. The Spanish government has effectively guaranteed Real Madrid and Barcelona against bankruptcy so they can run massive debts in order to buy the best players. This forces other teams that wish to compete against these clubs in the Champion’s League (a relatively new development) to pay similar rates. This does not explain the entire rise in salaries of course.

This is interesting data that confirms my understanding of what has happened to the incomes of sports celebrities, film stars, and popular authors (think J. K. Rowling), musicians and artists. I’ve long wondered whether the extension of the scope and duration of intellectual property rights has contributed to this trend. In which case the legitimacy of the increasing disparities in income turns on the legitimacy of the intellectual property regime.

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